Small ISPs should be exempt from strong net neutrality rules, trade group says

Most broadband providers -- all but a handful of the largest ones -- should be exempt from tough new net neutrality rules being considered by the U.S. Federal Communications Commission, a trade group has argued.

The FCC shouldn't impose new rules on small and medium-size ISPs because they lack the market power to selectively block or slow Web traffic as a way to charge websites for prioritized traffic, a lawyer for trade group the American Cable Association [ACA] wrote in recent letters to the FCC.

During net neutrality discussions over the past year, the ACA, representing about 800 small and medium-size ISPs, has essentially argued that less than 10 large ISPs should be subject to new net neutrality rules that would reclassify broadband as a regulated common carrier. ACA has voiced support for an open Internet and has said the FCC has authority to pass new rules without reclassifying broadband under Title II of the Telecommunications Act.

Smaller ISPs "do not, cannot, and do not wish to engage in practices that would harm Internet openness, either because they face competition or are striving to drive up adoption, and because they lack the negotiating power to extract compensation from Internet edge providers," wrote lawyer Barbara Esbin, representing the trade group, in a filing with the FCC this week.

Smaller ISPs don't have the ability to demand payments from websites or services like Netflix, Esbin added. In her letter, Esbin quoted Betty Zeman, marketing manager for ACA member Cedar Falls Utilities, which has about 12,500 broadband customers, as saying: "Netflix would laugh us out of the room if we asked for money."

Reclassifying broadband service as a regulated public utility, a move reportedly favored by FCC Chairman Tom Wheeler, would be "counterproductive" to a national goal of encouraging broadband deployment and competition, if the reclassification is applied to ACA's members, Esbin wrote in a second filing with the FCC, from late last month.

Small and medium-size ISPs "do not have the incentive or ability to engage in unreasonable or discriminatory practices," Esbin wrote.

ACA members met with FCC officials last week and asked them to exempt smaller ISPs from any new net neutrality rules. Among the ISPs represented at those meetings was Cedar Falls Utilities, which was visited by President Barack Obama last month when he called on the FCC to preempt state laws limiting municipal broadband projects.

While the ACA argued its members don't have incentives to discriminate against Web traffic, two net neutrality complaints in recent years were the result of actions by smaller ISPs, noted Matt Wood, policy director of Free Press, a digital rights group in favor of strong rules.

In 2005, the FCC fined Madison River Communications for blocking competing VoIP service, and in 2010, customers of Windstream Communications complained that it was redirecting some Google searches to its own service. Windstream stopped redirecting the search results after customer complaints.

"Customers need basic safeguards against unreasonable discrimination no matter how big or small their broadband provider may be, and even if those customers have a choice among broadband providers," Wood said by email. "Because once you're signed up, that cable company controls the only wire into and out of your house."

While smaller ISPs may not have market power to demand traffic prioritization payments from websites, those examples show there are other reasons for blocking or slowing some Web traffic, Wood said.

"In the end, it's hard to understand what ACA is complaining about," he added. "If its members truly have no incentive and no ability to block or discriminate unreasonably, then what's the burden from complying with rules against blocking and unreasonable discrimination? That's all the FCC is proposing to adopt here. ACA is basically saying we should only apply laws to the people who intend to break them."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

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